$150 Billion for a Beer? Funding Oppression in Zimbabwe
To fund his gangster regime, Marxist Robert Mugabe‘s government may be breaking all known records for hyperinflation. Recently “elected” President of Zimbabwe through a campaign of bombings, murders, rapes, torture and repression to destroy his political opposition, Mugabe has financed his regime of terror and oppression by wildly printing new money to fund the police, military and intelligence branches.
While at Independence in 1980 the Zimbabwe dollar was worth $1.25 (U.S.), as the Los Angeles Times reports, rampant inflation has resulted as Fidelity Printers & Refiners, the state-owned company, “tirelessly churns out bank notes for the Robert Mugabe government”:
As hyperinflation spiraled last year, Fidelity printed million-dollar notes, then 5 million, 10 million, 25 million, 50 million. This year, it has been forced to print 100 million, 250 million and 500 million notes in rapid succession, all now practically worthless. The highest denomination is now 50 billion Zimbabwean dollars (worth 1 U.S. dollar on the street). . . .
Before the crunch, a beer at a bar in Harare, the capital, cost 15 billion Zimbabwean dollars. At 5 p.m. July 4, it cost 100 billion ($4 at the time) in the same bar.
An hour later, the price had gone up to 150 billion ($6).
But now, Mugabe’s government is facing a massive cash crisis
. . . after a German company stopped supplying bank note paper because of concerns over Zimbabwe’s recent violent presidential election, widely seen as fraudulent by international observers.
The printing operation drastically slowed. Two-thirds of the 1,000-strong workforce was ordered to take a leave, and two of the three money-printing shifts were canceled.
The result on the street was an immediate cash crunch.
But that is not all:
“If you think this currency shortage is bad, wait two weeks. By then, it will be a disaster,” said a senior Fidelity staffer, who spoke on condition of anonymity because he would face dismissal and possible violence for talking to a Western journalist. The paper will run out in two weeks, he said.
In the modern world, most governments have long adopted policies of monetary monopoly, and the current Zimbabwean monetary disaster is reminiscent of the government-created hyperflations in Germany (1923), China (1948-49), Argentina (1979-83), Brazil (1986-94), Greece (1944), Hungary (1945-46), Bosnia-Herzegovina (1993), Nicaragua (1987-90), Angola (1991-95), Peru (1984-90), etc. As with Zimbabwe, such financial disasters are generally associated with wars (or their aftermath) and political or social upheavals that are ruinous to the citizenry.
With such a track record, why should people be forced to accept monetary monopoly that is inflating at all, and certainly one that becomes more worthless with each passing hour? And with the dollar the world’s reserve currency, what kind of inflationary pressures are the Federal Reserve’s responses to the enormity of U.S. government debt and the insolvency of banks today in the U.S. leading us into? In addition, if a massive shortage of monopoly currency suddenly occurs, as in Zimbabwe, then what?
Our book edited by Kevin Dowd and Richard Timberlake, Money and the Nation State, reveals the folly of government monetary monopolies and provides proven market-based solutions. And the economist George Selgin now provides additional insight in our new book, Good Money, which documents how since government currency is always improperly supplied, the freely competitive, private provision of currency is a must.